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A money changer counts Nigerian naira currency at a bureau de change. The naira has lost 25 percent of its value in the past year and the stock market has plummeted because of political uncertainty and halved prices for oil that provides most government revenue.

Nigeria: ‘The Boom Isn’t Over, It’s Still To Come’

Is there hope for Nigeria via domestic investment? There is merit in looking inwardly for sources to spur development, rather than always going cap in hand to foreign “investors”. This article, originally published in Forbes magazine, explores the domestic route.

Pete Guest
DEC 3, 2015

Muhammadu Buhari’s honeymoon period as Nigerian president is well and truly over. The collapse in the oil price over the past 12 months has left his government — and country — desperately short of hard currency, and forced him to trim spending. Global investors have scaled back their exposure to the country, as currency controls and a slowdown in growth hit sentiment.

Yet Amy Jadesimi, the managing director of one of Nigeria’s most successful companies, says that despite the pessimism that has infected international perception, the country still has an unprecedented opportunity to grow — if it is able to mobilize domestic capital for development.

“Technically, the boom has passed, in terms of commodity prices, but one could argue that from a Nigerian perspective, the boom has yet to come,” says Jadesimi, the managing director of LADOL, a giant manufacturing free zone in the commercial capital, Lagos.

“We’re a very wealthy country, but we look poor because we haven’t got a lot of dollars… We have a lot of capital in country. We need to fund our development through naira.”

The Central Bank of Nigeria has restricted the supply of dollars into the economy, which is heavily dependent on imported goods, leaving some importers unable to settle their bills. Banks are struggling, and capital markets investors have bailed out.

“I think it’s important that we don’t get too distracted by that,” Jadesimi says. “We do need foreign currency to do certain things, but we don’t need foreign currency to create infrastructure, we don’t need foreign currency to create jobs.”

Stimulus package

The government has said that it will source a $25 billion stimulus package from international and domestic sources, including its own sovereign wealth fund and domestic pension funds. If Nigerian money is deployed in long-term projects that develop infrastructure and human capital, that would be a lasting and positive legacy of the currency crisis, according to Jadesimi.

“There are all these tools that we have at our disposal that we haven’t been using,” she says.

The country needs to plan for an immediate term without much international support, and focus on following China’s route to development, where domestic success paved the way for massive international interest down the road, Jadesimi says.

Western analysts in particular have been quick to declare the end of the ‘Buhari Bounce’ — an uptick in sentiment that followed the peaceful handover of power after postponed elections in March. Hopes were high that Muhammadu Buhari, who was elected on a promise to tackle corruption and enforce the rule of law, would be able to fix some of the country’s perennial problems. However, a five-month delay in naming his cabinet and an apparent vacuum in economic policymaking have undermined sentiment.

“The international community seems to have this bizarre relationship with Nigeria. They’re always on the verge of falling in love with us,” Jadesimi says. “I don’t think we expect the international community to ever give us a pat on the back. I think we expect them to veer between telling us off or whispering sweet nothings in our ears and then not putting the ring on our finger.

“I think we’re as close to having the ring on our finger as we have been for the last decade, but we never ever going to consummate their relationship with us until we don’t need them to. That’s what happened with China and India.”

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